Blitzscaling Ventures has invested in companies like MultiOn (which offers consumer AI agents and APIs to help complete complex tasks) and Global Exchange Goods (an AI transaction platform offering tools for traders and market makers for transactions).

Yeh, however, views the education sector as a prime candidate for AI-driven transformation, particularly in personalizing education and providing widespread tutoring.

Regulatory compliance is an investment opportunity

Contrary to the belief that regulatory compliance is a saturated field, Rastogi sees it as “ripe” for investment. Recognizing the growth potential in 2023, Citi Ventures invested in Quantifind, which aids financial firms in anti-money laundering compliance, and Lexeon, which helps lawyers ensure contractual compliance for companies.

“In both cases, the ROI is very significant,” said Rastogi. “Because you could be saving the teams that are working on anti-money laundering, or legal teams, a lot of time and effort if you use AI properly.”

Startups, don’t compare yourself to existing players

Ray Wu, managing partner of Alumni Ventures, cautions against startups that compare themselves to existing market players.

“People tend to say, ‘I’m just like this [company] or that [company],” said Wu. “That’s fine, but there’s already a great example of that company out there. What makes you stand out?”

Instead, Wu is drawn to startups that emphasize unique product offerings, a strong founding team, and sustainable competitive advantages.

Alumni Ventures has backed companies like Cohere (which makes AI products for enterprise companies) and Influence (a platform that connects influencers, brands and agencies).

Achieving long-term differentiation

Parasvil Patel, a partner at Radical Ventures, cautioned against tech becoming commoditized due to innovations from major tech players.

Patel told ADWEEK that many text-generation companies that approached Radical Ventures lacked sufficient differentiation even before ChatGPT. Radical Ventures steered clear of investing in nearly a dozen similar firms, citing the importance of proprietary data and unique product elements for long-term differentiation.

“The challenge is not just creating text but building products with unique data elements or workflows that provide true value,” Patel said. “Without these, companies may merely offer interfaces for generating text, which is unlikely to sustain long-term differentiation.”